Input gleaned at public hearing on California Pistachio Commission

A capacity crowd filled a meeting hall in Fresno, Calif. on Dec. 6 to testify before the California Department of Food & Agriculture (CDFA) regarding the continuation of the California Pistachio Commission (CPC) and the preferences for the CPC’s future structure and direction.

The CDFA called for the public hearing in response to litigation filed against the CPC last year by a grower. The hearing testimony will assist the CDFA in making recommendations as to alternative forms of governance that will be presented to the industry for their consideration in conjunction with the upcoming continuation referendum.

Several industry members testified throughout the day before the CDFA panel. Many others also submitted written testimony.

CPC Chairman Kevin Herman presented a proposal developed and approved by the CPC board of directors. Paramount Farms submitted an additional proposal.

Herman told the CDFA panel, “We have a proposal that is very specific and well reasoned. It will modify the commission structure to impose a system of checks and balances oriented to consensus building, clarify the oversight authority of the Department of Food and Agriculture, and implement a promotion program that should further enhance the marketing of California pistachios.”

Herman’s comments were based on three actions taken by the CPC Board of Directors on Nov. 21. The actions are designed to improve on the status quo in three important ways and still protect essential programs by not empowering any one person or group to control the future of the commission.

Action 1: CPC board approved by a 7-2 vote

The first part of the motion proposed to modify commission bylaws to require at least a two-thirds vote by the board of directors to approve advertising and promotion programs during the 2007 and 2008 marketing seasons. The thought is to create an environment on the board of directors of cooperation and consensus building. Advertising and promotion was selected for this purpose because it is important to the commission’s mission to expand the market for California pistachios and thus demonstrates how seriously the board takes it commitment to inclusiveness in the decision making process.

The second part of the motion reaffirmed previous action by the CPC’s board of directors to request government oversight of advertising, promotion, and government affairs programs pursuant to the California Marketing Act of l937. An industry vote is required to implement this action.

The final part of the motion expands jurisdiction of the government affairs committee to include international trade issues. Further, the largest grower, on the condition that it produces for market 20 percent or more of the total volume of pistachios based on the average of the grower’s production for the immediately preceding two marketing seasons, is provided a seat on the committee. Also, the committee is empowered to retain expert consultants for advice in instances of differences in analysis or strategy by law firms and consultants retained by the Commission and those retained by individual growers regarding international trade issues.

Action 2: CPC board approved by a 6-3 vote

The largest grower, as previously defined, will be provided a seat on the commission’s board of directors. Legislation is required to implement this action.

The commission has been criticized by some as not being sufficiently inclusive in its board membership. The fact is all eligible growers may serve on the commission board of directors if nominated and selected in accordance with procedures adopted by the commission and concurred in by the Secretary of Food and Agriculture. There is no discrimination. All are encouraged to seek office. Eventually, as dictated by the process, some are selected and some are not.

Even so, in the interest of adding value and encouraging industry harmony, the commission will pursue legislation next year to amend its law and provide the largest grower a seat on the board of directors. The model that will be used is the California Avocado Commission that provides a seat for the largest marketer. The threshold volume in the avocado law for a guaranteed seat is 30 percent. The pistachio commission adopted a more generous 20 percent standard in recognition that the largest grower probably would not be entitled to the seat if the 30 percent standard in the avocado law were used. Again, the hope is that through this inclusive gesture value will be added to the process of developing and implementing Commission programs.

Action 3: CPC board approved by a 9-0 vote

Implement a brand credit program based on terms and conditions to be adopted by the commission’s board of directors subsequent to resolution of litigation challenging speech activities of the commission. An industry vote is required to implement this action.

Commission law presently authorizes a credit back program but to date it has not been implemented. Increasingly, however, growers and processors have expressed support for brand promotion to compliment, but not to replace, the commission’s successful generic promotion program. Unfortunately, the pending litigation complicates the commission’s ability to move forward at this time but we intend to do so in an appropriate manner as soon as the lawsuit is behind us.

Summary:

A complete copy of the hearing transcript including other presented proposals can be obtained from the California Department of Food & Agriculture, Attn: Lynn Morgan, Marketing Branch Chief, 1220 N Street, Sacramento, Calif. 95814, or by calling (916) 341-6005.